The S&P 500 traded near record territory on Tuesday before retreating with only about a half-hour left in the regular trading session. For the most part, markets had a steady day after data showed an increase in job openings, but didn’t spur significant concern about inflation.
Here’s how the major indexes ended the day: The Dow Jones Industrial Average fell 30 points, or 0.1%. The Nasdaq Composite advanced 0.3%. The S&P 500 edged past its closing high of 4,232 with roughly an hour left of trading but couldn’t hold the gains. It ended the day flat. Since hitting that closing high on May 7, the index has essentially gone nowhere.
The hot economy — a result of trillions of fiscal stimulus dollars and reopenings — has been reflected in stock prices. The S&P 500 is already up more than 14% year to date. Investors are now waiting to see if higher-than-expected inflation will prompt the Federal Reserve to take actions that would lift bond yields. Higher bond yields erode the value of future cash flows and bring stock valuations down.
In Asia, Tokyo’s Nikkei 225 fell 0.2%, while Hong Kong’s Hang Seng was little changed. The Shanghai Composite was 0.5% lower. The FTSE 100 in London rose 0.3%, as the CAC 40 in Paris lifted 0.1% and Frankfurt’s DAX slipped 0.2%.
The Job Openings and Labor Turnover Survey (JOLTS) showed 9.3 million openings for April, higher than the expected 8.2 million. More openings means higher demand for workers, which could potentially bring higher wages and therefore force companies to raise prices. Investors, though, have already digested the upward pressure on wages, as Friday’s employment report revealed as much.
“I don’t think the market is putting any merit into the JOLTS report this morning,” says Dave Wagner, portfolio manager and analyst at Aptus Capital Advisors. “What has changed in the last month? This is the April number here.”
Plus, a look under the hood of the market reveals one that isn’t overly concerned about inflation. Growth and technology stocks, which get a valuation boost with lower inflation and bond yields, were outperforming. The 10-year Treasury yield fell to 1.54% from a Monday close of 1.57%. “Today’s backdrop favors a mild de-risking and reduces the headwinds facing the most speculative names (which benefit from capped yields),” writes Dennis DeBusschere, head of portfolio strategy research at Evercore.
The lower yields are partly because some expect the Fed to take actions to lift yields at a fairly slow pace. “Fed watchers and former Fed officials are discussing a painfully slow taper plan rollout,” DeBusschere said.
Nymex Crude settled at $70.05 today, its first settlement above $70 since October 16, 2018.
Cryptocurrency asset Bitcoin fell near the $32,000 mark, from above $35,000 on Monday.
Wendy’s (WEN) stock rose 25.85% and may be a newly popular “meme stock.”
Target (TGT) stock added 1.78% after getting upgraded to Buy from Neutral at UBS.
Delta Air Lines (DAL) stock gained 2% after getting upgraded to Buy from Hold at Jefferies.
EOG Resources (EOG) stock initially fell before rising 0.33% after getting downgraded to Hold from Accumulate at Johnson Rice.
Write to Jacob Sonenshine at email@example.com